Market and price developments

Dear Customer,

The great turmoil that has gradually begun dominating markets over a long period and has resulted in price increases is unfortunately still continuing. There are many reasons for this besides the already known commodity price increases.

Below, we will try to explain some of the reasons for these developments.

Energy prices are going up:

The developments in energy prices are, among other things, due to lack of waterflow for hydroelectric power and lack of wind for the wind turbines, which has resulted in Scandinavia not generating sufficient power to cover Denmark’s energy demand, and therefore it has been necessary to buy more expensive electricity from other countries. The rising gas and coal prices in most European countries have also resulted in rapidly rising energy prices.

Rapidly rising oil prices:

Oil prices have also been rapidly rising and are getting close to their all-time highs, and this also has an impact on commodity prices in general and other oil-based products such as diesel and gasoline.

Increasing shipping/freight costs:

Not everyone is aware about the introduction of the Danish national road package and the consequences it has had on the transport sector. The intention of the national road package was, among other things, to ensure that foreign hauliers pay their drivers the Danish minimum wage for domestic Danish transport jobs, also known as cabotage operations. However, an unintended consequence has been that the foreign firms now only take on domestic transport jobs to a very limited extent. This has limited the supply of hauliers operating in Denmark and has resulted in higher freight costs.

The rising freight costs are also impacted by the very high rates for shipping containers from Asia, and this has also in turn had an impact on the prices of commodities imported from Asia.

Increasing demand:

The increasing demand from the industrial sector has also had an effect on materials such as POM - the production of the raw materials cannot keep up with demand. The production capacity for raw materials for POM is only expected to be expanded in a few years at the earliest. This means that supply cannot meet demand and thus prices are increasing rapidly. In many cases, this also results in longer delivery times than normal.

All of the factors mentioned above have contributed to the increasing prices for our semi-finished plastic products.

Some have called this ‘the perfect storm’ - and we would tend to agree, it is all very bothersome.

We are continuing to monitor developments closely and we are working hard to ensure that we can supply the products that our customers demand.

Your sales consultant or our customer support will of course be available regarding the situation and the latest development of the plastics market.

Kind regards,

Henning Hess

RIAS A/S  |  Industrivej 11  |  DK-4000 Roskilde  |  Phone: +45 46770000  |  |  CVR: 44065118